Saturday, December 20, 2014

Well-written oped on buying local

Link here

Excerpt:

For the most part, however, the economic claims of the "buy local" movement are hooey.
Economic impact studies can have some uses. But in the public policy realm, they have become a racket. They hang ridiculously precise numbers on inherently vague and difficult to measure phenomenon.

Friday, December 19, 2014

CBO examines economic impact of fracking

Link Here

Excerpt:

A new report from the Congressional Budget Office details exactly how shale drilling technologies have benefited consumers as well as the economy:
  • Without shale gas, natural gas costs in 2040 would be 70 percent higher than they are projected to be.
  • In 2020, GDP will be 0.7 percent higher than it would have been without shale. By 2040, GDP will be 0.9 percent higher than it would have been without shale.
  • The federal government's tax revenues will be $35 billion higher in 2020 due to shale energy than they otherwise would have been.

Many studies are quite biased.  While CBO reports aren't always accurate - this is probably the least biased source to ever conduct a study on the economic impact of fracking.

Thursday, December 18, 2014

Fracking, economic freedom, and David R. Henderson

Fracking, economic freedom, and David R. Henderson.  Those were my thoughts this morning as I read the story on how NY may ban fracking.

The politicians in NY are making the decision that all NY citizens are not allowed to frack - even those who would wish to.  It is a classic case where economic freedom is violated, although politicians will not phrase it that way.   (They will always claim its for the greater good.)

Speaking of economic freedom - please mark your calendars for January 21st.  David R. Henderson will be speaking at Susquehanna University.  He might not address fracking specifically, but he's been on the front lines fighting for freedom for many years.



Monday, December 15, 2014

The minimum wage is stifling the American dream

Link here

Excerpt:
Most troublingly, these low-skilled workers saw “significant declines in economic mobility,” as these workers were 5 percentage points less likely to reach lower middle-class earnings in the medium-term. The authors provide a possible explanation: the minimum wage increases reduced these workers’ “short-run access to opportunities for accumulating experience and developing skills.”

For those who want to climb from a lower income level to a higher income level, nothing is more crucial than job experience. That is the single top thing that a poor person should do if he/she does not wish to remain poor.

While my family wasn't poor, I was from a working-class family of five where the main breadwinner was a US postal carrier. I worked paper routes for about 2 years and then at fast food restaurants for another 2 years, all before I was 16-years old. Those jobs taught me to work hard along with some skills that were valuable to other employers and in life (e.g., how to deal with people). That helped enable me to get higher paying jobs as an older teenager and in college and beyond.

If the minimum wage was higher, those opportunities would not have happened for me. Unfortunately, with the minimum wage as high as it is right now, there are millions of Americans who won't have the opportunities I had. The current (high) minimum wage is stifling the American dream.


Thursday, December 11, 2014

Learning economics through pictures - free market innovation

This chart shows the price of a GB of data.


Source here

I don't have much else to say here - except that this type of incredible innovation that has cut the costs so dramatically only happens with free markets.

This raises a good question: Has the price of any government product dropped over time?

Wednesday, December 10, 2014

Learning Economics Through Pictures - NFL Ticket Prices and Demand


This screenshot was taken of stubhub.com.  It shows prices to five different NFL games, all played this past Sunday.

This is a good illustration of how demand for a product affects its price.  These stadiums aren't dramatically different in size - all can hold tens of thousands of customers.  By December, however, some teams are no longer in playoff contention, while others are.  Three teams contending for playoff spots, the Dolphins, Bengals, and Lions, all have minimum ticket prices of about $50 while a fourth, Cleveland, has a minimum price of $31.

The two teams that aren't in playoff contention that are hosting games are the Jaguars and the Redskins.  Their minimum ticket prices are $25 and $6.

With a higher demand and a fixed supply, the price should increase to ensure an equilibrium.  That appears to be happening in the market for sports tickets.

Another note - given that many tickets are purchased months in advance, this equilibrium can only occur when there are legal markets that allow tickets to be resold.